When a tech company gets hit with a patent infringement lawsuit, it can cost tens of thousands of dollars in legal fees and millions of dollars in damages if a jury sides with the patent holder. But cyber security company Cloudflare, which is currently being sued for patent infringement, is paying researchers in hopes that the company can invalidate a group of patents being used to sue Cloudflare and other companies.
Last week, Cloudflare announced that it paid $7,500 to 15 researchers who submitted prior art, or evidence that the patented invention or method existed prior to the patent application, and is therefore not an original idea create by the applicant. Prior art is often cited as grounds to invalidate a patent. Cloudflare's campaign, the company states, is to prove that a group of 37 patents being used by Blackbird Technologies in over 100 lawsuits are too broad and vague to be used, or were not original creations or ideas by the patent recipient.
Blackbird Technologies, a Massachusetts company founded by attorneys, advertises its business as a model for "individual inventors and small companies to monetize their intellectual property" by suing other companies for patent infringement. (Blackbird is not a law firm but its founders are lawyers and can file lawsuits.) Blackbird is using its collection of 37 patents, which the company bought from the original patent holders, to file lawsuits against companies like Lyft, Amazon, Walmart, Lululemon, and other companies. Many of the cases, including one against Amazon for allegedly infringing on a patent for a bicycle pet carrier, are settled out of court.
Blackbird is suing Cloudflare for allegedly infringing on a patent for a method to provide an "internet third party data channel." U.S. Patent No. 6,453,335, a patent filed 18 years ago, is "very old and very vague," Cloudflare writes on its blog. The company refers to these lawsuits as "extortion" by a "patent troll" and says it has become too easy for patent holders to sue tech companies and then settle for money. (Tech companies are incentivized to settle to spend less on legal fees and avoid a potential multi-million dollar judgment.)
"As technologies continued to grow and develop, the patent system became inundated with bad patents issued during the dot-com era, many of which included vague claims relating to rudimentary web technologies," Cloudflare writes on its blog. "Over a decade later, these claims were being applied out of context and asserted broadly to shake down innovative companies using vastly more sophisticated technologies."
Back in November, Cloudflare "declared war" on Blackbird Technologies after it filed its patent suit against the company. Cloudflare announced that it would spend $100,000--$50,000 is from Cloudflare and an anonymous donor gave the other $50,000--on crowdsourcing evidence to weaken Blackbird's patents. Cloudflare set up a section on its site for researchers to upload prior art, which has received more than 230 submissions so far.
The submissions of prior art could help Cloudflare challenge Blackbird's patents. Cloudflare says it will use recent submissions concerning a patent for "GPS-Internet Linkage," which is being used to sue six companies, to file what's called an ex parte reexamination of the patent. An ex parte reexamination is when the party files a petition with the U.S. Patent and Trademark Office (USPTO) to question a patent's validity. The USPTO then reassesses the validity of the challenged patent.
Cloudflare says it is fighting all the patents owned by Blackbird, not just the one being used in the lawsuit against it. The company says standing up to Blackbird is the right thing to do. But, the company has a lot of money to lose if it is not successful in its mission. Recently, Nintendo lost a patent infringement case and was ordered to pay $10 million in damages to the patent holder.